Inflation Calculator
Calculate inflation impact
Frequently Asked Questions
How does the Inflation Calculator adjust for purchasing power?
The calculator uses the formula: Adjusted Value = Original Value × (1 + inflation rate)^years. For example, $100 with 3% annual inflation is worth $134.39 after 10 years, meaning you need $134.39 to buy what $100 bought a decade ago.
What is the average historical inflation rate?
US average inflation has been approximately 3.2% per year since 1913. Recent decades have seen lower averages: 2.5% in the 2010s. The Federal Reserve targets 2% annual inflation as a healthy economic benchmark.
How does inflation affect savings and investments?
If your savings earn 1% interest but inflation is 3%, your real return is -2% — your money loses purchasing power. To maintain value, investments must outpace inflation. Historically, stocks average 7% real return after inflation.
What causes inflation?
Main causes include demand-pull (too much money chasing too few goods), cost-push (rising production costs), and monetary expansion (central banks increasing money supply). Supply chain disruptions and energy price shocks also contribute.
How do I calculate real vs nominal returns?
Real return ≈ Nominal return - Inflation rate. More precisely: Real return = ((1 + nominal) / (1 + inflation)) - 1. A 7% nominal return with 3% inflation gives approximately 3.88% real return.